(12PressRelease.com) “Nikkei Financialâ€: Investors fear double-dip for UK once spending cuts and tax hikes are imposed.
“Nikkei Financial†analysts believe that the sheer scale of spending cuts and/or tax increases required to appease the bond markets may tip Britain‘s economy back into recession.
Sterling continued to slide against its trade-weighted counterparts as investors apparently concurred. It would appear that investors are weighing the imminent austerity measures against recently released data emerging from the UK this week which showed that unemployment had risen to 2.5 million, the highest since 1994 whilst the total number of the workforce considered to be economically inactive reached a record of 8.17 million.
As if that was not sufficient, “Nikkei Financial†pointed to comments made by the Bank of England which reported that its growth forecast would likely have to be revised downwards from an estimated annual pace of 3.5% by 2012.
Sterling dropped close to $1.46 in a clear sign that any financial market equivalent of a “thumbs up†to the finalization of a coalition government between the Conservative Party of Prime Minister David Cameron and the Liberal Democrat Party of newly-appointed Deputy Prime minister, Nick Clegg had been short-lived.
“Nikkei Financial†said that although the new government had not explained exactly how it intended to slash £6 billion from its budget this year, it was likely that the measures would include some element of increased taxation.